Wednesday, January 21, 2015

Brazil unanimously raises rate by another 50 bps

Brazil's central bank raised its benchmark Selic interest rate by a further 50 basis points to 12.25 percent, as expected, in light of "the macroeconomic scenario and the outlook for inflation."
In a brief statement, the Central Bank of Brazil's monetary policy committee, known as Copom, said the decision was unanimous and there was no bias indicated.
The central bank has now raised its policy rate by 500 basis points since embarking on a tightening cycle in April 2013, raising the rate by 175 points in 2014 alone, as inflation remained close to the upper limit of the bank's target of 4.5 percent, plus/minus 2 percentage points.
Economists had expected the central bank to raise rates in its effort to bring down inflation and Alexandre Tombini, central bank president, has stressed that the bank's overriding mission is to slow inflation to the target by no later than 2016.
Brazil's inflation rate has been above the central bank's midpoint target since August 2010 but eased to 6.41 percent in December from 6.56 percent in November.

The Central Bank of Brazil issued the following statement:

"Assessing the macroeconomic scenario and the outlook for inflation, the Committee decided unanimously to raise the Selic rate by 0.50 percentage points to 12.25% pa, without bias.